Des Moines City Manager Scott Sanders estimates there will be an $18 million loss of revenue for the next 60 days due to COVID-19. With the city at a stand still, it’s projected that there will be little revenue from sales tax, permits, and licenses.
“Nothing like this has ever happened. This is a very unique situation,” Sanders tells WHO-TV 13. At $5.8 million, the most significant loss for the city is associated with the Local Option Sales and Service Tax Fund, a sales tax that was just approved in March 2019.
The tax fund is used for infrastructure projects and public safety enhancements. Other significant losses include a $3.6 million loss to the Road Use Tax Fund and a $2.1 million loss in hotel tax revenue.
Sanders says the projected losses won’t completely stop current infrastructure projects, just slow them down in the short term.
The city hasn’t had to make any permanent structural changes but it has temporarily furloughed 5 percent of its workforce. Most of them are librarians who can't work from home. A majority of the city’s 2,000 employees are still able to work in the field, including public works, police and fire and the parks department.
“We’re trying to avoid any structural issues. So what we’re seeing right now with this event, back with lost revenues is a cash flow event. We’ve built up strong reserves so that we can still pay our bills, still make payroll, things of that nature,” Sanders tells WHO TV-13.
Additional hirings associated with non-essential workers are currently on hold. “This event will have a definite impact on our capacity for new service, and our capacity for capital improvement projects … there will have to be fewer street projects and neighborhood revitalization,” Sanders says.
Sanders says they will re-evaluate the city’s workload every one to two weeks. Additional decisions regarding furloughs and project reductions will be made on a case-by-case basis.